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2013 in Review

The past year has been a mixed bag for Southeast Michigan's manufacturing companies.

The dust had settled from the recent industry collapse, but 2013 let out all those skeletons hidden in closets during the downturn.

Automakers abandoned the Kumbaya dealings with suppliers as General Motors Co.'s new terms and conditions set ablaze the supply base, and contracts negotiated during the fallout ended in disputes throughout 2013.

Bad deals and alleged crimes surfaced in the case of Southfield-based Revstone. The group was compiled from struggling supplier assets through the new millennium, only to implode due to unfavorable contracts and alleged pension theft from its owner.

Manufacturing jobs continued transformation, leaving the traditional laborers in a lurch as technical skills and education requirements continued to rise — and there's no end to this in sight.

Goldman Sachs' presence in Detroit, by way of its aluminum warehousing outfit Metro International Trade Services LLC, became international news in 2013 (a story Crain's first covered in 2011). Wall Street's control of the ebb and flow of physical aluminum has led to lawsuits in Detroit, as well as investigations by federal regulators. The warehouses will continue to be a hot button in 2014.

But it wasn't all bad news in 2013. Southeast Michigan, especially the city of Detroit, continued to see drastic foreign investment.

The M-14 corridor in Plymouth, Novi and Northville saw new investment thanks to its 'neutral' location, and China became a major player in Southeast Michigan real estate. Experts say we can expect the influx of foreign investment to continue into 2014. The growing wealth in China led to an influx of investment from the nation as metro Detroit continued its economic rebound in 2013.

Top stories in manufacturing last year:

George Hofmeister

The fall of Southfield-based Revstone Industries LLC is one of hubris. George Hofmeister, founder and orchestrator of several bankrupt assets, ran into trouble in early 2013 with a lawsuit from his largest financier.

The suit resulted in the bankruptcy filing of Revstone in February. Hofmeister and the trusts that own his stable of auto suppliers already were under investigation by the U.S. Department of Labor for allegedly making $34.6 million in prohibited loans from employee pension funds to companies within the Revstone organization. Revstone also is under criminal investigation due to the allegations.

The ongoing investigations and bankruptcy of the parent organization have led to the closure and bankruptcy filing of nearly all of its subsidiaries.

Pricing disputes are not uncommon in the automotive industry. But TRW Automotive Inc.'s pulling of a contract with General Motors Co. that produced $700 million in revenue in 2012 is unprecedented.

While neither company would comment on the specifics, on- and off-record sources confirmed that a pricing dispute on future brake contracts led to TRW pulling the contract at its Saginaw brake plant, which it acquired from Delphi during the Troy-based supplier's bankruptcy. GM is rumored to have paid much of the employees' wages and is not willing to continue under new contracts, leading to TRW's pulling of the contract.

Manufacturing jobs are changing. The era of the laborer isn't over, but it is in transformation as greater skills and education become more critical to employment and the state's economy, experts say.

Photo by BLOOMBERG NEWS
Aluminum ingots such as these are stacked in warehouses throughout Michigan. Feds are investigating whether the metal is being stored for long periods to raise profits.

For the past three years, concerns over market-traded aluminum and its effect on manufacturing have grown. And Goldman Sachs Group Inc.'s Romulus-based aluminum warehousing unit Metro International Trade Services LLC is now in the crosshairs of several civil antitrust lawsuits and an investigation by federal regulators.

The dust-up has led to new rules from the London Metal Exchange, which regulates how aluminum warrants are traded on the market.